In the throes of conflict, Ukraine is witnessing an unexpected influx of investments, particularly from family offices, drawn to the prospect of rapid returns once peace is secured. The country’s defence industry, bolstered by a sixfold growth since Russia’s February 2022 invasion, is a magnet for investors. Halyna Yanchenko, secretary of Ukraine’s National Investment Council, is at the forefront of this effort, engaging with key players in London to drum up support for Ukraine’s reconstruction.
“Defence is one of three key sectors attracting significant attention and funds from both domestic and foreign investors,” Yanchenko told PWM. The other two sectors ripe for investment are construction materials and energy, including renewables and mineral extraction. With Russian airstrikes regularly disabling power supplies, Ukraine is keen on developing clean energy hubs that present more challenging targets.
Yanchenko’s message to potential investors is clear: “Start earlier.” She emphasizes that even for conservative investors, preparing the groundwork for future projects takes considerable time—up to 18 months for bureaucracy and due diligence alone. Actual construction, however, can be swift, with industrial facilities built in as little as three months.
Despite the ongoing conflict, family offices are already making moves. One European family is acquiring city centre apartments in Kyiv, anticipating the return of refugees and the start of reconstruction. Others are focusing on the safer western regions, where production has been relocated from the east. Early investors include families from the Czech Republic and Poland, drawn to the shorter distances and easier connections with EU nations.
Success stories include the WF Oriv wind power plant, a joint project between Czech company MND and Ukrainian firm Eco-Optima. The €60m investment features 10 turbines powering 50,000 households, bolstering Ukraine’s energy independence. Karel Komarek, Founder of KKCG, underscores the viability of Ukrainian investments with the right expertise and strong partnerships. His company has navigated wartime challenges, adapting to logistical hurdles and maintaining a significant workforce in Ukraine.
The KKCG family’s commitment extends beyond business; their foundation works to preserve Ukraine’s cultural heritage, a target since the invasion’s outset. Over 1,700 cultural sites have been damaged or destroyed, a devastating yet often overlooked consequence of war. The family’s Ark for Ukraine project aims to protect and restore these artefacts, ensuring they remain vital to Ukraine’s identity and future.
As investors eye opportunities in Ukraine, they’re also watching US developments closely. One family office notes the rapid pace of US authorities, predicting a 95% chance of a lasting peace settlement that could benefit defence industries across Turkey, Central Asia, and China. This trend is pushing asset managers to diversify their portfolios, creating a broader momentum beyond US tech leaders.
Louise Tumchewics, a visiting fellow at King’s College London, highlights Ukraine’s adaptability in defence innovation. The country’s development of UAVs and FPV drones has led to a domestic drone industry, emphasizing affordability and quick deployment. Public-private partnerships with Ukrainian start-ups are expediting this process, attracting Western investors.
Ukraine’s model of defence innovation, incentivized by tax breaks and streamlined bureaucracy, is proving faster than traditional, centralized systems. European leaders’ commitments to increase defence funding are set to further boost this ecosystem.
The evolving mood among investors is decidedly “risk on,” with a sense of movement since the US elections. However, fears linger that freezing US weapons aid and intelligence sharing could shift the battlefield advantage to Russia. Urban warfare’s resource-intensive nature makes maintaining supply lines crucial, a challenge Ukraine continues to address with innovative solutions.
In this complex landscape, Ukraine stands as a testament to resilience and innovation, attracting investors with a blend of opportunity and purpose. As Yanchenko puts it, investing in Ukraine is backing “a social type of entrepreneurship,” where returns are measured not just in profits, but in the security and future of generations to come. The construction industry, poised at the intersection of sustainability and development, is watching closely, ready to play its part in rebuilding a nation on the path to a greener, more resilient future.